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Iowa has the Fourteenth Highest State and Local Tax Burden in the Nation for FY 2016

May 14, 2018

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In Fiscal Year (FY) 2016, Iowa collected $15.3 billion in state and local taxes—or $4,871 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average Iowa taxpayer can afford this level of taxation?

 

To better answer this question, this analysis will calculate Iowa’s tax burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.

 

 

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

 

As shown in Chart 1, Iowa’s state and local tax burden (tax collections divided by private sector personal income) was the fourteenth highest in the nation for FY 2016 at 15 percent—or 5 percent above the national average of 14.3 percent.

 

Chart 1 Iowa State and Local Tax Burden FY 2016.jpg

 

#Iowa state and local #taxburden in FY 2016 was the 14th highest in the nation at 15%— 5% above US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #IApolitics #IAlegis #IAgov #PolicyData (click to tweet)

 

As shown in Chart 2, Iowa’s tax burden has increased over time by 76 percent to 15 percent in FY 2016 from 8.5 percent in FY 1950.

 

Chart 2 Iowa State and Local Tax Burden by Type of Tax FY 1950 to 2016.JPG

 

#Iowa state and local #taxburden has increased 76% between FY 1950 (8.5%) to 2016 (15%) http://bit.ly/2FX9C8F @keypolicydata #IApolitics #IAlegis #IAgov #PolicyData (click to tweet)

 

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

 

 

To put Iowa’s tax burden into perspective, let’s compare it to size of major industries in the state (as a percent of private sector income). As shown in Chart 3, Iowa’s 14.4 percent tax burden is greater than these combined industries: construction (7.6 percent) and retail trade (6 percent).

 

Chart 3 Iowa State and Local Tax Burden vs. Major Industry FY 2016.JPG

 

#Iowa state and local #taxburden > construction and retail http://bit.ly/2FX9C8F @keypolicydata #IApolitics #IAlegis #IAgov #PolicyData (click to tweet)

 

Iowa’s higher than average state and local tax burden is driven by a high property tax burden (4.9 percent, 14th highest).

 

Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Iowa—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.

 

The 20 Iowa counties with the highest local government tax burden include:

 

  • Winnebago County, IA (8.8 percent)
  • Montgomery County, IA (8.5 percent)
  • Union County, IA (8.5 percent)
  • Clarke County, IA (8.3 percent)
  • Emmet County, IA (8.1 percent)
  • Ringgold County, IA (8.1 percent)
  • Johnson County, IA (8.0 percent)
  • Louisa County, IA (7.8 percent)
  • Cass County, IA (7.8 percent)
  • Guthrie County, IA (7.7 percent)
  • Pottawattamie County, IA (7.5 percent)
  • Decatur County, IA (7.4 percent)
  • Fremont County, IA (7.3 percent)
  • Story County, IA (7.2 percent)
  • Dickinson County, IA (7.2 percent)
  • Wayne County, IA (7.1 percent)
  • Wright County, IA (7.0 percent)
  • Calhoun County, IA (6.8 percent)
  • Marshall County, IA (6.8 percent)
  • Palo Alto County, IA (6.7 percent)

 

The 20 Iowa counties with the lowest local government tax burden include:

 

  • Mitchell County, IA (4.8 percent)
  • Iowa County, IA (4.7 percent)
  • O'Brien County, IA (4.7 percent)
  • Ida County, IA (4.7 percent)
  • Marion County, IA (4.7 percent)
  • Sac County, IA (4.7 percent)
  • Grundy County, IA (4.6 percent)
  • Hancock County, IA (4.5 percent)
  • Buchanan County, IA (4.5 percent)
  • Butler County, IA (4.3 percent)
  • Adams County, IA (4.3 percent)
  • Plymouth County, IA (4.2 percent)
  • Cherokee County, IA (4.2 percent)
  • Benton County, IA (4.1 percent)
  • Chickasaw County, IA (4.0 percent)
  • Sioux County, IA (3.8 percent)
  • Warren County, IA (3.7 percent)
  • Lyon County, IA (3.6 percent)
  • Osceola County, IA (3.5 percent)
  • Dallas County, IA (2.9 percent)

 

Chart 4 Iowa Local Tax Burden by County FY 2016.JPG

 

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

 

Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?

 

 

 



Category: Tax Burdens

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.


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